Universal Credit as Director of Limited Company

calcotti

jrtoolking said:

Can I follow up on the minimum income floor. From my reading of it am I correct that it will not affect my claim (when it is reinstated in April) because I have children aged 3 and 9 plus I'm a 35+ hour carer for my son? 

If your son is in receipt of a DLA then, as his carer, you are correct that the MIF will not apply to you because you have no work requirements. As a carer your maximum UC entitlement includes an additional amount of £162.92/month. I had overlooked the reference to your son with a disability.

Normally parental responsibilities do not prevent the MIF applying but because the expected hours of work will be lower to take into account parental responsibilities the level at which the MIF is set is lower. A parent of a child below the age of 3 would be exempt.

jrtoolking

From what I have read it seems that the Director of Ltd Co is treated as Self Emplyed within a claim for UC.  Can others verify this. If not then the Limited Company would shield the Director ( i.e. Me) from any declarations of earning to UC as it is the Ltd Company earning income and not the individual, me. So if no money was paid to the Director, me, in wages or dividends the Ltd Company could have a healthy balance but the Director would have zero income?

calcotti

garmeg said:

calcotti said:

jrtoolking said:

My initial question is if I make no profit in my Limited Company can I still claim UC? Do I have to report money in and money out each month to UC. If the latter is required some months I have zero income and lots of expenses whilst other months I get paid for large jobs and have more income than expenses. Overall at the end of the tax year 19/20 I will have made a loss. The Limited Company pays me neither a wage or dividends. 

You have to report all business income and expenditure every month. The difference is your ‘earnings’ for the UC calculation that month. UC is worked out monthly, not annually. If you have losses in a month they can be carried forward to offset high earnings later. High earnings in one month may produce surplus earnings which will affect later months.
https://revenuebenefits.org.uk/universal-credit/guidance/entitlement-to-uc/self-employment/surplus-earnings-and-losses

What happened in 2019-20 has no relevance to your UC claim.

The OP is the director of their own limited company. They are not self employed. Unless there is some nuance in UC that treats the former like the latter?

For UC purposes they are treated as self employed. The policy intent is to avoid people with their own businesses manipulating their income flow to maximise their benefit.

jrtoolking

To muddy the waters more. I also received for a Bounce Back Loan of £10,000 which has gone into my Ltd Company bank account to ease cash flow problems. Will UC look at this as £10,000 income. It's not my money to spend on nappies and food and I have to pay it back. 

calcotti

jrtoolking said:

Thanks all: I can see I have been able to bumble into UC without much questioning by my Coach. And since I am a carer of 35 hours plus a week have even less to answer for as far as looking for alternative work.  I am genuinely now trying to change my life work balance (another Covid wake up call!) by working less and caring for my two children more. I can summarise all your advice as:
1.when the minimum income floor rule is reinstated in April my payments will do down. 
2.now that I'm starting to work again and have income come back, make sure I fill out the income and expenses on my To Do List at UC and let their calculator figure it out.

I am still undecided about the legality (putting morals aside) of using employer based SIPP contributions to minimise my income on each months UC assessment period.

1. Now clarified above that MIF will not apply to you (if your son gets DLA).
2. You must complete the income and expenditure every month as listed on the to do list.if you don’t you will not get paid.
i can’t see anything to prevent you making pension contributions to reduce your ‘earnings’ figure. The payments must be into an approved scheme.
https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/928618/admh4.pdf
See paragraphs H4113 and H4124 To H4127.

jrtoolking

Thanks everyone. I seem to be back where I started:
1. I don't have to worry about the MIF, as my son gets DLA
2. As long as my expenses are equal to or greater than my receipts each month I will continue to receive the full UC payments.
3. I can make employer based contributions (up to £40K a year) to keep my "profits" from being greater than my expenses. 

jrtoolking

I'd still appreciate your views on the £10K bounce back loan I took out: will that be classes as profit, or simply disregarded as it's a
loan?

calcotti

jrtoolking said:

I'd still appreciate your views on the £10K bounce back loan I took out: will that be classes as profit, or simply disregarded as it's a
loan?

Bounce back loan is business capital which is disregarded for UC purposes.

jrtoolking

Thanks that's a useful input. I suppose that would the same for any other loan or Directors loan too?